we’ve been trying to reproduce this issue but everything seems fine so far.
Let us know some more details, how archives are created, which characters are being used, etc. so we may reproduce with settings as close as yours as possible.

I think the key factor is to make sure that your Windows system locale is something other than Windows-1252.http://en.wikipedia.org/wiki/Windows_1252
(If you have Vista/Win7 Ultimate, you can change the system language easily. If not, try to change “the system locale for non-unicode programs” in Control Panel.)

So, for example, Chinese Windows is forced to treat umlaut letters as unicode characters. I am attaching a 7-zip file whose name has ö.attachment_p_21197_0_köln.7z

what happens when it is not automatically selected? You still do not get the image?

No image at all.
I went to a folder that contains an image file by using the tree display on the left. No automatic selection at this point. Then I selected the image file on the right pane. The error message is shown at this point.